NASFAA President Testifies at Gainful Employment Hearing

The Department of Education held its first public meeting on Nov 5, 2010, to hear from interested parties in response to its Notice of Proposed Rulemaking to define Gainful Employment metrics. The Department hopes to gather further input on gainful employment before final regulations are issued. Only those who had previously submitted comments on the NPRM were invited to testify and the Department prohibited new issues from being brought up during the meeting. The majority of the comments delivered yesterday focused on the technical implementation of gainful employment rather than broad objections to the proposed rules. Hearing each organization's testimony were representatives from the Department's legal counsel, career policy staff, and political staff.

NASFAA President Justin Draeger testified at the meeting and expressed support for the Department's overall goals, but highlighted some concerns about how the rules could be implemented.

"We do not challenge the concepts behind the two proposed tests outline in the NPRM," Draeger said. "The year over year increase in student borrowing illustrates one of our biggest failures in higher education financing: a movement away from public subsidization of higher education onto the backs of individual students and parents. Ensuring that certain programs lead to gainful employment is a step in the right direction. But I believe we must move forward with an eye towards careful implementation that avoids any unintended consequences."

Draeger's testimony called on the Department to use existing measures of workforce placement, student loan indebtedness, and successful loan repayment to implement gainful employment rules before trying new, untested methods. A large portion of Draeger's testimony focused on how preliminary measures that already exist could be used as filters in determining which programs adequately prepare students for gainful employment before ultimately applying repayment and debt-to-income tests.

"Using existing completion, placement, and cohort default (perhaps with different thresholds) data as starting points, we can ensure that students are being treated fairly, that the administrative burden on schools (which is ultimately passed along to students in some form) is kept to a minimum, and students are successfully completing their programs, finding work, and successfully repaying their loans," Draeger said.

Specifically, NASFAA called upon the Department to:

Allow exemptions for institutions with a low percentage of borrowers or low average indebtedness

Use existing regulatory requirements for completion and placement rates on short loan-only training programs. These programs are already subject to minimal completion and placement rates that are defined in regulation (CFR 668.8(d) and (e)). Under existing regulations, these very short certificate programs must have completion and placement rates of at least 70 percent.

Examine applying CDRs to individual programs, not just institutions as a whole, perhaps with different thresholds, to create a more accurate picture of whether students are taking on unmanageable debt

Include deferments and other forms of repayment that do not result in an annual decrease in loan principal (e.g., income-based repayment) in the repayment calculations

"NASFAA supports efforts to ensure that students are being prepared for gainful employment and that debt burdens are kept to an absolute minimum," Draeger concluded.

Additional remarks at Thursday's meeting were given by organizations including: for-profit institutions, the United States Student Association (USSA), the Public Interest Research Group (PIRG), the American Council on Education (ACE), the Council for Opportunity in Education (COE), and the U.S. Chamber of Commerce. The meetings will continue today.